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Retailer Payment, Gift and Loyalty Cards in North and Latin America is a report, based on a survey of over 1,400 prominent retail brands in 12 countries, about the provision of co-branded and private-label payment cards, gift cards and loyalty cards by major retailers across the Americas. Retailer participation in coalition loyalty schemes is also considered.

Countries covered are Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Ecuador, Mexico, Paraguay, Peru, Uruguay and the US.

In total, the research identifies close to 600 retailer payment cards, a similar number of closed-loop gift cards, and almost 400 proprietary retailer loyalty programs and coalition loyalty schemes, thereby providing a definitive analysis of retailer co-branded, loyalty and private-label programs in North and Latin America that goes far beyond the scope of previous published research.

Moreover, the PartnerBASE™ database that accompanies the report details each of the many initiatives for retailer credit, deferred debit, debit and rechargeable pre-paid cards traced by Finaccord, specifying the operating models used by retailers, the payment networks to which the cards are affiliated and the identity of the ultimate card issuers in each case.

Key findings from the executive summary include:

- with respect to the penetration of co-branded and private-label / store cards by category of retailer, Finaccord’s research shows that across North and Latin America as a whole, cards achieve the highest penetration among fuel retailers (69.6%), department store / variety retailers (58.8%) and supermarket / hypermarket chains (52.8%);

- 23.9% of the retailers with co-branded or private-label credit card schemes promote cards that are linked to more than one network - this can occur either by means of the fact that they offer two separate cards or, in a few cases, because a single card carries more than one marque;

- Alliance Data (via Comenity Bank) and GE Capital are the largest competitors in the pan-American market for retailer payment cards when measured by their number of exclusive card-issuing relationships, albeit the vast majority of these are concentrated in the US;

- as far as coalition loyalty programs are concerned, the survey ascertains that across the 12 countries investigated in North and Latin America, 341 major retailers were found to take part in such schemes, equivalent to a penetration rate of 24.1%.

Table Of Contents

Retailer Payment, Gift and Loyalty Cards in North and Latin America
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
In most countries, retailing is the most important co-branding arena for card issuers… 3
… and the number of active coalition loyalty programs is continuing to increase each year 3
The evolution of the retailing market itself also encourages the launch of retailer payment cards 3
Methodology 4
Survey of retailers 4
The survey's scope covers over 1,400 major retail brands drawn from ten categories and 12 countries… .. 4
… and classified according to their use of offline-only, online-only or mixed distribution models .. 4
Definitions 6
Payment cards, gift cards and loyalty programs 6
Operating models 6
Weighted shares 7
PartnerBASE 7
Finaccord 7
2.0 REGIONAL OVERVIEW 9
Retailer payment cards 9
Credit, debit and prepaid cards 9
Over a third of major retail brands in North and Latin America market a co-branded or private-label card… ... 9
…with Brazil laying claim to the highest provision rate for retailer payment cards .. 9
Retailer payment cards are organised through a variety of different operating models… 11
… including use of external, joint venture and captive card issuers plus schemes managed internally .. 11
Preferred operating models differ substantially from one country to another in North and Latin America ... 11
GE and Alliance Data are both prominent as the owners of retailer card issuers... .. 13
... although the operations of both in this sphere are concentrated in North America .. 13
Almost 40% of retailer payment cards in North and Latin America run on a private network… ... 14
… with Visa just ahead of MasterCard in both the unweighted and weighted analyses .. 15
Fuel distributors are the most likely to have introduced their own payment card .. 17
Well over a third of both mixed and offline-only brands promote a co-branded or private-label card .. 17
Gift cards 19
More than 40% of major retail brands in North and Latin America offer stored-value gift cards… .. 19
… with those in the supermarket and hypermarket sector most likely to do so 20
Retailer loyalty programs 22
Over a half of major retail brands in North and Latin America participate in some form of loyalty program… 22
… with the rate of involvement highest in the US 22
Specialist retailers of consumer electronics are least likely to have a loyalty program . 23
Proprietary loyalty programs 25
More than 40% of major retail chains in North and Latin America offer a proprietary loyalty scheme . 25
Coalition loyalty programs 26
Nearly a quarter of retailers surveyed participate in at least one coalition loyalty scheme ... 26
3.0 ARGENTINA 28
Introduction 28
Retailer payment cards 29
Credit, debit and prepaid cards 29
Co-branded or private label credit cards are on offer from almost a quarter of major retailers... . 29
… with the largest share of schemes in evidence managed internally by the retailers themselves . 29
Among card issuers, Cencosud is the leader in both unweighted and weighted terms… ... 30
… and CMR Falabella rises to second position in the weighted analysis 30
Private-label card schemes are more numerous than those linked to national or international networks ... 31
Payment card initiatives are most numerous among retailers in the supermarket and hypermarket sector ... 32
Gift cards 35
Stored-value gift cards have not yet gained much penetration among major retailers in Argentina 35
Retailer loyalty programs 37
Close to a quarter of major Argentine retailers are involved in a loyalty scheme of one sort or another... .. 37
… with fuel brands and retailers of books and media products the most likely to be active in these fields . 37
Proprietary loyalty programs 38
Coalition loyalty programs 39
The suspended ServiClub coalition scheme is expected to resume at some point in 2014 39
4.0 BRAZIL 40
Introduction 40
Retailer payment cards 41
Credit, debit and prepaid cards 41
Almost a half of major retail brands in Brazil operate a co-branded or private label payment card . 41
Itaú Unibanco is the most frequently named partner for retailer payment cards in Brazil . 41
Bradesco's retailer card division expanded greatly following its acquisition of ibi in 2009 41
Other providers, including Cetelem and Losango, also serve a significant number of retailers ... 42
Captive and joint venture card issuers are utilised in a minority of cases… ... 42
… with internally-managed schemes occurring more frequently 42
Retail brands belonging to Walmart utilise a hybrid operating model 42
Midway Financeira is a substantial player in retailer payment cards in Brazil… ... 43
…as is LuizaCred, a joint venture between Magazine Luiza and Itaú Unibanco .. 43
Given its partnerships, Itaú is likely to be the leading issuer of retailer payment cards 43
MasterCard and private-label programs are more numerous than Visa programs .. 44
All retail brands in two categories have introduced their own payment cards… ... 46
… with brands operating an offline-only distribution model the most likely to promote a card . 46
Gift cards 48
Just under a quarter of major retailers in Brazil offer a stored-value gift card… ... 48
… with initiatives for these products visible across all retailer categories except one .. 48
Close to a third of retailers operating a mixed distribution model promote gift cards 48
Retailer loyalty programs 50
Just under a half of retail brands surveyed participate in any form of loyalty program . 50
Specialist retailers of consumer electronics are least likely to have a loyalty program . 50
Proprietary loyalty programs 52
Almost a half of major retail chains in Brazil have launched their own proprietary loyalty scheme .. 52
Coalition loyalty programs 52
Three different coalition loyalty programs have attracted major retail brands as partners in Brazil… .. 52
…with dotz named by the largest number of retailers 52
Two coalition loyalty programs originate from the airline sector… 52
…and both count retail brands owned by Walmart as active participants 52
5.0 CANADA 54
Introduction 54
Retailer payment cards 55
Credit, debit and prepaid cards 55
Just over 30% of retailers in Canada promote a co-branded or private-label payment card… 55
… with well over a third of these issued by captive providers 55
Although limited to four partners, Chase lays claim to some of the most important relationships 56
Canada Tire's captive partner serves four of the group's retail brands 56
Canada hosts a comparatively fragmented supply structure for retailer payment cards .. 57
President's Choice Bank serves the various retail brands of the Loblaw (Weston) group ... 57
Canadian Tire Bank has issued over 4 million MasterCard credit cards 57
TD Bank greatly expanded its payment card portfolio through acquisitions in 2011 and 2013 57
When viewed in weighted terms, Chase jumps to second position and Desjardins remains third .. 58
MasterCard is used a lot more frequently than Visa for retailer payment cards in Canada . 59
Retailer payment card initiatives are most prevalent in the supermarket and hypermarket category .. 60
Gift cards 62
Over a half of major retail brands in Canada offer a closed-loop prepaid card 62
…with those operating a mixed distribution model the most likely to be active in this field .. 62
Retailer loyalty programs 64
Over 40% of major retail brands in Canada participate in some type of loyalty scheme… .. 64
…with supermarket and hypermarket brands the most likely to promote such a program .. 64
Proprietary loyalty programs 66
Almost a third of major retail brands in Canada operate a proprietary loyalty program 66
Coalition loyalty programs 66
Five coalition schemes are found with active retailer participation in Canada 66
Aeroplan is the original loyalty scheme of international loyalty firm Aimia… .. 66
…while Air Miles represents another program with roots in aviation 66
Overwaitea's More Rewards program includes partners from outside the group… . 67
…as does Hudson's Bay Company's HBC Rewards, which was launched in 2001… 67
…while the Canadian Automobile Association maintains its own coalition program 67
6.0 CHILE 68
Introduction 68
Retailer payment cards 69
Credit, debit and prepaid cards 69
A third of major retail brands in Chile operate their own co-branded or private-label payment card… 69
… with captive card issuers constituting the dominant operating model in this context ... 69
Retailer cards account for over a half of the total number of credit cards in circulation in Chile ... 70
Banco de Chile and Banco Condell de CorpBanca are the only external card issuers used by retailers 70
Card issuers' partnership shares are similar whether viewed in unweighted or weighted terms . 71
Some retailer payment cards run on closed, private networks or 'semi-open' networks… .. 72
… while others now carry the MasterCard or Visa brands 73
Department stores and variety retailers are most likely to have introduced their own payment cards 74
The Falabella group has passed the half-way point in migrating customers to co-branded cards… . 76
…while Cencosud has launched a program to unify its retailer card programs under one central marque 76
In spite of interest from Itaú Unibanco, Cencosud has retained full ownership of its credit card business .. 76
Financial services make a very significant contribution to the revenues of the Ripley group in Chile .. 76
Gift cards 77
Comparatively few major retail brands in Chile offer a stored-value gift card 77
Retailer loyalty programs 79
Over a third of retail brands surveyed in Chile participate in a loyalty program of one sort or another 79
These brands are drawn from five out of ten retailer categories 79
Proprietary loyalty programs 81
11 major retailers in Chile run their own proprietary loyalty program 81
Coalition loyalty programs 81
Three coalition loyalty programs are adhered to by retailers in Chile 81
LAN Airlines promotes a payment card issued by Santander, co-branded with its loyalty scheme… . 81
…while Falabella and Ripley run coalition schemes linked to cards issued by their captive banks . 81
7.0 COLOMBIA 83
Introduction 83
Retailer payment cards 84
Credit, debit and prepaid cards 84
Retailer payment cards have been launched by more than a third of major retail brands in Colombia… ... 84
… with most arranged via a single external card issuer 84
Banco Falabella is the leading issuer in both unweighted and weighted terms… 85
... ahead of Colpatria and Tuya (owned by Scotiabank and Bancolombia, respectively) . 85
When viewed in weighted terms, the supply structure becomes more concentrated ... 85
By network affiliation, private-label schemes make up the largest single portion of the market ... 86
Eight retailer categories feature retail brand involvement in this sphere 87
Gift cards 89
Comparatively few major retailers in Colombia offer closed-loop prepaid cards to their customers 89
Retailer loyalty programs 91
The rate of involvement in loyalty programs nears 40% of major retail brands investigated… 91
… with department stores and variety retailers the most likely to be active in this domain .. 91
Proprietary loyalty programs 93
13 retail brands have linked their proprietary program to a corresponding payment card 93
Coalition loyalty programs 93
Only one coalition loyalty scheme features major retail brand involvement in Colombia . 93
8.0 COSTA RICA 94
Introduction 94
Retailer payment cards 95
Credit, debit and prepaid cards 95
Retailer payment cards have been launched by more than one in three major retail brands in Costa Rica… ... 95
… with almost all organised through a single external card issuer 95
BAC Credomatic is the leading issuer of retailer payment cards in both unweighted and weighted terms… . 96
… with Visa's share among networks falling significantly in the weighted analysis .. 97
Department stores and variety retailers feature the highest rate of involvement as a category ... 98
Gift cards 100
Less than one in four major retail brands maintains a stored-value gift card program in Costa Rica 100
Retailer loyalty programs 102
The rate of involvement in loyalty programs exceeds 50% of major retail brands investigated… . 102
… with supermarkets and hypermarkets the most likely to be active in this domain .. 102
Proprietary loyalty programs 103
9.0 ECUADOR 104
Introduction 104
Retailer payment cards 105
Credit, debit and prepaid cards 105
Just over 20% of major retailers in Ecuador maintain a co-branded or private-label payment card scheme... . 105
… with the lion's share of initiatives in evidence managed internally by the retailers themselves . 105
Among external card issuers, Diners Club is the leader in both unweighted and weighted terms . 106
A half of the network relationships for retailer cards in Ecuador involve private-label networks . 107
Payment card initiatives are most numerous among department stores and mixed retailers 108
Gift cards 110
Gift cards are not an especially prominent offering among major retail brands in Ecuador ... 110
Retailer loyalty programs 112
The rate of involvement in coalition loyalty programs is higher than that for proprietary schemes… 112
… with supermarkets and hypermarkets involved in the most loyalty programs overall 112
Proprietary loyalty programs 114
Less than a quarter of major retail chains in Ecuador have launched a proprietary loyalty scheme… .. 114
Coalition loyalty programs 114
…while slightly more participate in one of the two coalition loyalty programs found in the country .. 114
Both coalition programs were originally proprietary schemes that have since expanded .. 114
10.0 MEXICO 116
Introduction 116
Retailer payment cards 117
Credit, debit and prepaid cards 117
Over a third of major retail brands in Mexico operate their own co-branded or private-label payment card… .. 117
… with captive card issuers quite commonly active in this context 117
Banco Azteca has expanded its distribution reach to more than 1,400 branches since launch... . 118
... helping both consumer loans outstanding and pre-tax profits to surge in recent years .. 119
BanCoppel has also experienced a rapid increase in both its loan book and profitability... ... 120
... although the progress made by Banco Famsa has been slightly less eye-catching... ... 120
... and Banco Walmart remains loss-making despite strong growth in consumer loans 120
Banco Fácil has been reconfigured as Consubanco by its two co-owners .. 120
When viewed on a weighted basis, MasterCard overtakes Visa as a retailer payment card brand .. 121
Department stores and variety retailers are most likely to have introduced their own payment card… 122
… although card programs launched by supermarket or hypermarket brands are most numerous . 122
Gift cards 124
Just over 20% of major Mexican retailers offer stored-value gift cards 124
Retailer loyalty programs 126
Retailer involvement in loyalty programs is limited to proprietary (as opposed to coalition) schemes ... 126
Only major retail brands in the fuel and sporting goods categories are absent from this sphere ... 126
Proprietary loyalty programs 128
35 major retail brands operate their own proprietary loyalty programs 128
Coalition loyalty programs 128
Some retailers allow members to redeem program currency but none to earn it ... 128
11.0 PARAGUAY 129
Introduction 129
Retailer payment cards 130
Credit, debit and prepaid cards 130
A few retailer payment card schemes have been introduced in Paraguay… 130
… with a narrow majority of initiatives in evidence operated by external partners .. 130
Banco Itaú is used by two high-profile supermarket brands 131
Private-label card schemes account for the majority of retailer payment card schemes 132
Payment card initiatives are most numerous among retail brands operating a mixed distribution model . 133
Gift cards 134
Major retail brands in Paraguay display little enthusiasm for introducing gift cards 134
Retailer loyalty programs 137
A third of retailers participate in either a proprietary or coalition loyalty scheme… . 137
… with supermarket and hypermarket brands the most likely to be active in these fields .. 137
Proprietary loyalty programs 138
Two retailers have linked their loyalty scheme only to a corresponding retailer payment card .. 138
Coalition loyalty programs 139
Just one coalition program has attracted retailer involvement in Paraguay . 139
12.0 PERU 140
Introduction 140
Retailer payment cards 141
Credit, debit and prepaid cards 141
A substantial percentage of major Peruvian retailers promote co-branded or private-label payment cards… .. 141
… with a clear majority making use of a captive issuer in this context 141
Among all card issuers, Banco Falabella is the leader in both unweighted and weighted terms… ... 142
... in a market in which there are a dozen non-internal card issuers in total . 142
Visa is dominant as a network used for retailer payment card programs 143
Payment card initiatives are most numerous among fuel distributors and offline-only retailers . 144
Gift cards 145
Closed-loop gift cards are yet to establish much of a foothold among major retailers in Peru ... 145
RETAILER PAYMENT, GIFT AND LOYALTY CARDS IN NORTH AND LATIN AMERICA
© FINACCORD 03/2014 VI

Retailer loyalty programs 148
Just over a half of retailers participate in either a coalition or proprietary loyalty scheme… ... 148
… with at least one brand involved in this area in eight of the retailer categories investigated .. 148
Proprietary loyalty programs 150
Just under a third of major retail chains in Peru have launched a proprietary loyalty scheme… ... 150
Coalition loyalty programs 150
…with a slightly higher figure participating in one of two coalition programs 150
13.0 URUGUAY 151
Introduction 151
Retailer payment cards 152
Credit, debit and prepaid cards 152
Close to a third of major retail brands promote a co-branded or private-label payment card… . 152
… with most of these organised in association with a single, external card issuer . 152
Four external card issuers have established partnerships for retailer payment cards 153
Visa is the network most commonly used for retailer payment card programs in Uruguay 154
Payment card initiatives are restricted to four retailer categories 155
Gift cards 156
Gift cards are only absent from the category of books and media product retailers ... 156
Retailer loyalty programs 159
All retailer involvement in loyalty schemes stems from proprietary loyalty initiatives... ... 159
… with two retailer categories featuring maximum participation rates 159
Proprietary loyalty programs 160
14.0 USA 161
Introduction 161
Retailer payment cards 162
Credit, debit and prepaid cards 162
Co-branded and private-label payment cards are widespread among major retail brands in the US… 162
… and three issuers account for a half of all payment card schemes between them… . 163
… although there are a further 20 external partners active in this field… 164
… plus a number of captives, which means that its tail is quite fragmented 165
Several retailers continue to issue payment cards themselves with no apparent external or captive partner ... 165
Comenity Bank, owned by Alliance Data, manages over 30 million payment card and customer accounts 166
WEX Bank is a leading provider of fleet fuel cards in the US 166
Citibank, Comenity Bank, GE Capital and U.S. Bank are the market leaders 167
The retailer payment card market has been characterised by numerous acquisitions in recent years….............. 167
… including the acquisition by Capital One of the private-label credit card portfolio of Kohl's… 167
… and a comparable deal involving TD Bank Group and Target 167
GE Capital also works in this sphere with numerous regional retail brands… 169
… stating that customers with retailer cards make more regular and higher value purchases .. 169
Private-label cards continue to dominate, whether viewed in unweighted or weighted terms ... 169
Retailers operating a mixed distribution model are most likely to promote their own payment card .. 169
Gift cards 172
The closed-loop prepaid gift card market is worth over USD 300 billion in terms of total loaded value… . 172
…with retailers in the sporting goods sector the most likely to be active in this field .. 172
Retailer loyalty programs 174
Over two thirds of major retail brands in the US participate in some type of loyalty scheme… . 174
…with retailers in the department store and variety sector the most likely to promote such a program 174
Proprietary loyalty programs 176
Over a half major retail brands in the US operate a proprietary loyalty program 176
Coalition loyalty programs 176
Numerous major retailers are affiliated to Sallie Mae's Upromise program . 176
15.0 APPENDIX 177
Major captives and joint ventures 177
Over 50 captive or joint venture issuers of retailer payment cards are active in North and Latin America 177

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